Previously, we discussed how you can act as your own importer of record when bringing goods into the USA. 

A rising concern is whether you need to establish an LLC in the USA to act as a foreign importer of record and whether there are better IOR alternatives for foreign importers.

The direct answer is no! You don’t need an LLC in the USA to act as a foreign importer of record. But what are the requirements for acting as your own IOR? What other IOR options do you have? And what is the best option for you?

To address these concerns, Blackthorne IOR explains how the importer of record (IOR) works in the USA, including the FIOR and third-party IORs.

Let’s kick off the discussion!

Who can be the Importer of Record (IOR) in the USA?

The United States recognises three parties who can assume the IOR role:

Foreign Importer of Record (FIOR)

If you are a foreign company importing into the USA, you can act as your own importer of record through the Foreign Importer of Record (FIOR) option. 

The option allows you to control customs compliance, duties, and the entire import process, provided you meet applicable CBP requirements.

Consignee as the Importer of Record

The consignee (customer, buyer, receiver) in the USA can also serve as the importer of record. In this case, the consignee assumes the legal responsibility for customs clearance and related procedures.

Third-Party Importer of Record

You can hire a third-party entity established in the USA to represent you. This is the best option for foreign businesses that lack a US presence, have limited customs expertise, or prefer to outsource the compliance responsibility associated with importing to the US.

Let’s explore the requirements for each of the three IOR options.

Requirements to Act as an Importer of Record in the USA

You must meet the following requirements to act as a foreign IOR, third-party, or consignee IOR:

Foreign Importer of Record (FIOR)  Requirements

If you are a foreign importer and choose to act as your own importer of record, you must meet the following requirements:

• Appoint a local, licensed agent: As a foreign entity, you must appoint a licensed customs broker to file customs documentation and liaise with customs officials.
• Sign a Power of Attorney (POA): To authorise your customs broker to act on your behalf in the US, you must sign a formal, legal Power of Attorney document.
• Obtain a financial guarantee: You are required to purchase a customs bond, which acts as an insurance policy to guarantee the payment of duties, taxes, and other import charges.
• Obtain a customs-assigned importer number (CAIN): You must register with CBP to obtain an importer ID that uniquely identifies your import transaction and facilitates the import process.
• Meet all regulatory requirements: The customs broker doesn’t handle product compliance. 

You must oversee import compliance, including accurate HS classification, product valuation, and adherence to safety and technical standards.

You can check out our previous article to learn more about how to become a foreign importer of record, including the benefits and responsibilities of an FIOR.

Third-Party IOR Requirements

If you engage a third-party IOR, such as Blackthorne, to represent you, the compliance responsibility shifts to that third-party entity.

You need to provide the following information concerning your transaction for the third-party IOR to represent you effectively:

• Signed Power of Attorney (PoA): You must issue a document granting the IOR legal authority to act on your behalf. This allows them to file customs declarations, pay duties, and communicate with authorities.
• Clear contractual agreements: Provide a sales contract or purchase order that clearly outlines shipment terms (Incoterms), valuation, and ownership. That way, the IOR can understand responsibilities between you and your customers.
• End-user and end-use statements: The IOR conducts due diligence to establish if the consignee is authorised to import into the US. But it’s essential to disclose the final destination, the end-user’s details, and the intended use of the goods. This is critical for preventing export control violations or sanctions, especially for restricted or dual-use items.

Note: While the IOR handles any issues that may arise with your shipment, they may need additional information or specific documentation to verify compliance. Being available ensures such information is shared in time to avoid customs clearance delays.

Consignee IOR Requirements

Your customer in the USA (consignee) may be willing to act as the importer of record. Before designating the customer as the IOR, establish if they meet the following requirements:

• Local legal presence: The consignee must be a registered business entity with a valid tax identification number and a physical address in the US to handle local customs obligations.
• Familiarity with import procedures: The consignee must understand customs clearance procedures and requirements for the imported products.
• Financial responsibility: The consignee must be prepared to pay all applicable duties, taxes, and import fees, and obtain a customs bond to ensure payment.
• Regulatory and technical knowledge: The consignee must oversee product compliance, including accurate HS classification, adherence to safety and technical standards, and obtaining necessary import licenses or permits.
• Record-Keeping: The consignee must maintain accurate records of all import transactions, licenses, and compliance documentation for the minimum required duration.

Role of an IOR When Importing to the USA

Regardless of who assumes the IOR role, the designated entity is legally accountable for the entry of the goods into the United States.

Here are the seven key roles and responsibilities of the IOR in the USA:

1. Accurate HS Classification and Valuation

The first thing you must do as an IOR before initiating any import process is understanding the import requirements for the specific goods. 

The correct customs classification code helps determine these requirements, including technical requirements, relevant certifications and licences, and applicable duties and fees.

2. Customs Entry Documentation

The IOR is responsible for filing all necessary entry documents with U.S. Customs and Border Protection (CBP). This involves providing accurate shipment information, bills of lading, and commercial invoices to ensure the goods are legally declared and cleared for entry into the U.S.

3. Payment of Duties and Taxes

The IOR pays all import duties, taxes, and fees owed to the U.S. government. They must ensure that these financial obligations are met upon entry, often guaranteed through a customs bond.

4. Product Compliance 

As the IOR, you must ensure that imported products comply with all applicable U.S. laws and federal regulations. 

The compliance procedures include accurate classification of goods under the Harmonized Tariff Schedule (HTS) and adherence to safety, health, and technical standards enforced by agencies such as the FDA, FCC, or CPSC.

5. Planning and Coordinating Shipment Freight

The IOR is responsible for overseeing the logistics of the shipment from origin to the final destination. This includes coordinating with freight forwarders and carriers to ensure timely transport and organising for last-mile delivery.

6. Responding to CBP Inquiries

The IOR is the primary contact for Customs and Border Protection. That means you are responsible for addressing requests for information (RFIs), audit requests, or any post-delivery notices to ensure ongoing compliance.

7. Record-Keeping 

Under U.S. customs regulations, the IOR must maintain accurate and complete records of all import transactions for at least five years. 

These records come in handy during compliance audits or when addressing import transaction queries to demonstrate compliance with trade laws.

How to Choose an IOR when Importing into the USA

Meeting all the IOR requirements is just one criterion for choosing the best IOR for your shipment.

So, before you designate your customer as the IOR or choose a third-party IOR, you need to evaluate the following:

Your Business Presence in the USA

You don’t need to establish an LLC in the US to act as a foreign importer of record. However, having local personnel can make it easier to manage customs documentation and inquiries.

If you have limited resources in the US, a third-party IOR may provide a more practical solution.

Your Compliance Expertise

As earlier discussed, you need a clear understanding of the US import requirements, including customs valuation, tariff classifications, technical standards, and documentation requirements to act as your own IOR.

If your team lacks such expertise, outsourcing the responsibilities to an experienced IOR lowers the risk of noncompliance.

Your Customer’s Willingness to Act as the IOR

Some US customers prefer to manage customs clearance themselves, while others expect you to manage the import process.

Confirm your customer’s preference before designating them as the IOR and develop Incoterms that clearly define the terms of service.

Nature of your Goods

Highly regulated goods usually attract complex import requirements and procedures. For instance, servers, networking equipment, medical equipment, and dual-use technologies require various certifications and approvals from relevant authorities.

In such cases, partnering with an experienced IOR helps simplify the complexities as they are familiar with the import requirements and procedures.

Cost vs Convenience

Acting as your own IOR reduces third-party service fees. But it also broadens your responsibilities as you are accountable for import compliance. 

Depending on your internal expertise and the complexity of your shipment, the time and resources required to manage the import transaction may outweigh the initial cost savings.

On the other hand, hiring a third-party IOR involves an upfront service fee, but reduces your administrative and compliance burden. 

An experienced IOR also streamlines customs clearance, lowering the risk of noncompliance. The improved operational efficiency and reduced compliance risks can increase profit margins in the long term. 

FAQs

Here are quick answers to the frequently asked questions concerning IOR in the USA:

1. What is the cost of an IOR in the USA?

The cost varies based on shipment volume, frequency, type of goods, and the required customs bond. It is best to request a quote from an IOR service provider to understand the specific fees for your shipment.

2. How do I Know if I am the Importer of Record?

You are the Importer of Record if your name, tax ID, or business entity is listed as the consignee or importer on the customs entry documents, specifically CBP Form 7501.

3. Is the Importer of Record Responsible for Tariffs?

Yes. The Importer of Record is legally liable for the payment of all import duties, tariffs, taxes, and fees owed to the U.S. government.

4. Can Blackthorne Act as my Importer of Record?

Yes. Blackthorne can act as your Importer of Record, exporter of record, freight forwarder, or even export licensing consultant to help you import goods into the USA compliantly and efficiently.

Import into the USA Compliantly with Blackthorne IOR

The USA is one of the few countries that allow foreign importers to act as their own IORs (FIORs). Various importers, especially those who import only occasionally, find the option viable because it gives them control over the import process.

But if you are importing IT equipment multiple times in a year and need support navigating the US regulatory requirements, a third-party IOR service would be more practical.

Blackthorne IT has a legal presence in the USA, and we have supported IT and medical equipment importers for over 25 years. We can act as your third-party IOR and support your business expansion in the following ways:

• Door-to-door delivery: We offer delivery to data centres, with Forward Stocking and Mini-Forward Stocking locations so your customers don’t have to worry about last-mile delivery.
• 360-degree compliance: We ensure compliance with all import requirements and regulations before shipping, during customs clearance, and after delivery.
• International supply chain optimisation: With coordinated logistics and automated tracking, you can always check your shipment status until it reaches your customers.
• Financial efficiency: No hidden costs. You can predict the cost of your import transaction via our IOR calculator to plan your finances accordingly.
• Technical expertise: Our USA-based IT experts provide on-site and remote support to minimise downtime, maximise system performance, and extend your equipment’s lifespan. 

So, how would you like Blackthorne IT to support you?

You can email us at sales@blackthorneit.com or call us now so we can plan your business expansion into the USA.